President Bush on Wednesday signed the fiscal year 2006 budget reconciliation bill (S 1932), which contains $40 billion in spending reductions from Medicare, Medicaid and other programs, the Washington Post reports (Baker, Washington Post, 2/9). The measure, which the Senate approved 51-50 in December 2005 and the House approved 216-214 earlier this month, includes $6.4 billion in spending reductions from Medicare and $4.8 billion in spending reductions from Medicaid over five years. It will allow states more flexibility to charge Medicaid beneficiaries higher copayments and deny services for lack of payment. In addition, the law tightens restrictions on the transfer of assets by seniors applying for long-term Medicaid coverage. The law also makes seniors with home equity of more than $500,000 ineligible for nursing home benefits. In addition, the law expands Medicaid eligibility to children with disabilities whose families have annual incomes up to 300% of the federal poverty level, beginning Jan. 1, 2007. Provisions affecting Medicare include higher premiums for some beneficiaries and a freeze in payments for home health care providers. The law also cancels a scheduled reduction in the Medicare physician reimbursement rate and provides funding for medical care to some survivors of Hurricane Katrina (Kaiser Daily Health Policy Report, 2/2). Speaking at the bill signing, Bush said that without reforms to entitlement programs, "spending for Medicare, Medicaid and Social Security alone will be almost 60% of the entire federal budget" by 2030. He added, "That will leave future generations with impossible choices -- staggering tax increases, immense deficits or deep cuts in every category of spending" (Pickler, AP/Houston Chronicle, 2/8). Bush also said that his FY 2007 budget proposal would reduce Medicare spending growth from 8.1% to 7.7%. He said, "That's not a cut. It's slowing down the rate of growth. It's the difference between slowing your car down to go the speed limit, or putting your car in reverse" (Dennis, CQ Today, 2/8).

House Ways and Means Committee Hearing
HHS Secretary Mike Leavitt on Wednesday testified before the House Ways and Means Committee on Bush's $2.77 trillion FY 2007 budget proposal (Fagan, Washington Times, 2/9). The proposal includes $36 billion in spending reductions for Medicare over five years and nearly $5 billion in Medicaid spending reductions over five years (Kaiser Daily Health Policy Report, 2/8). Spending cuts for Medicare, which are the largest single reduction in the proposal, include lowering hospital reimbursement rates for an estimated savings of more than $8 billion over five years and reducing nursing home reimbursements for an estimated savings of more than $5 billion over five years. Bush's budget plan also would reduce Medicare home health care provider reimbursements, for savings of $3.5 billion over five years (Kaiser Daily Health Policy Report, 2/7). Leavitt said the proposed changes to Medicare are "steps to improve the long-term fiscal health of Medicare." Ways and Means committee Chair Bill Thomas (R-Calif.) said the Medicare changes would "support our commitment to ensure that providers are paid accurately to secure the best deal for taxpayers and seniors." Committee member Kevin Brady (R-Texas) said, "There probably isn't an appetite" for the spending reductions in Congress. Committee member Jim Ramstad (R-Minn.) said, "It's a hard sell, for sure." Committee member Rahm Emanuel (D-Ill.) said the Bush administration ignored key areas of possible Medicare savings, including elimination of a so-called "slush fund" that aims to encourage participation of insurance companies in Medicare. Committee member Jim McDermott (D-Wash.) said that, while Bush claims to be making health care a priority, he is actually "whacking away at those programs" (Washington Times, 2/9).

House Budget Committee Hearing
The House Budget Committee on Wednesday also held a hearing on Bush's FY 2007 budget proposal, with testimony from White House Office of Management and Budget Director Joshua Bolten. Committee Chair Jim Nussle (R-Iowa) said efforts to contain the growth of spending on entitlement programs should be "regular and routine." He added that Medicare and Medicaid are among the government's "largest and least sustainable programs." Nussle said that beginning this year, new earmarks for local projects should be allowed only if lawmakers agree to cut entitlement spending. "If we're not going to do reconciliation, if we're not going to do reform, then I don't think we should be able to go home ... and tell them about all the good things we brought them," Nussle said (CongressDaily, 2/8). Nussle said he was hopeful that the proposal would move quickly in the House. Some Democrats on the committee "attacked" proposals to charge enrollment fees and increase prescription drug copays for some veterans and seniors at the same time that Bush is also proposing to permanently extend tax cuts, CQ Today reports (Dennis, CQ Today, 2/8).

House Veterans Affairs Committee
The House Veterans Affairs Committee on Wednesday held a hearing on Bush's FY 2007 budget proposal for the VA. The budget proposal calls for veterans with higher incomes or less-severe disabilities to contribute higher copays for prescription drugs and pay an enrollment fee. Committee Chair Steve Buyer (R-Ind.) said that he supports the new enrollment fee and higher drug copays because it would allow VA to focus on veterans with more severe injuries. He added, "This budget sends a message that if you are hurt or wounded, we will be there for you." Buyer said that Congress likely will reject the enrollment fee and increased copays, as it has in the past. He added that if the proposals are rejected, Congress will be forced to "buy that back into the budget." Some Democrats on the committee "criticized the proposed fee increase as unacceptable," CQ Today reports. Carl Blake, senior legislative director for the Paralyzed Veterans of America, estimated that the additional costs would lead about 200,000 veterans to forego VA health coverage (Starks, CQ Today, 2/8).